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Divorce! Amylin Pharma and Lilly Call It Quits Over Diabetes Drug

SAN DIEGO ( TheStreet) -- The contentious -- and litigious -- diabetes relationship between Amylin Pharmaceuticals (AMLN) and Eli Lilly (LLY - Get Report) has come to an end.

Amylin and Eli agreed to terminate their partnership for the diabetes drug exenatide, sold as Byetta and in clinical development as a once-weekly version known as Bydureon, the companies announced Tuesday.

Amylin will regain full rights to both exenatide-based diabetes drugs, starting in the U.S. next month and progressing to all markets by the end of 2013. In exchange, Amylin will pay to Lilly $250 million in cash upfront and up to $1.2 billion in total, based on future exenatide sales.

Amylin shares fell 8% to $10.01 in pre-market trading.

The Amylin-Lilly divorce ends a rocky 10-year relationship between the two companies. Most recently, Amylin filed a lawsuit against Lilly alleging anti-competitive activity after Lilly entered into a marketing partnership with Boehringer Ingelheim to sell a competing diabetes drug.

Together, Amylin and Lilly sold Byetta, a once-daily injection for Type 2 diabetics. The companies have struggled to get approval for a once-weekly version of the drug known as Bydureon. FDA rejected Bydureon last year. Amylin and Lilly resubmitted the drug for approval and FDA is expected to announce another approval decision on January 28, 2012. Bydureon was developed with assistance from Alkermes (ALKS), which will receive royalty payments tied to the drug's sales.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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